The prepaid expense module in ScaleXP streamlines your prepayment tracking, providing complete journal entries that can be posted to Xero or QuickBooks in just two clicks. This guide outlines the best practices and tips to help you get started quickly.

See also How to automate prepaid expenses: Setting up prepaid expenses in ScaleXP.

Best practices

Here are two tips to get the most out of ScaleXP:

Include service dates. Ensure that each bill's line item description includes the relevant service dates. This can be specific dates or general terms (e.g. "annual" or "quarterly") to specify the period. For more detail, see How ScaleXP reads dates.

Set up a dedicated prepaid expense account. Create a specific prepaid expense (balance sheet) account for ScaleXP. This will dramatically simplify the setup process.

You have flexibility to code bills to either the relevant expense account or one or more dedicated prepayment balance sheet accounts — or even mix both methods.

Benefits of coding to the balance sheet:

• Eliminates the need to confirm items that should be treated as prepaid expenses in ScaleXP
• Easier to spot missing or incorrect date ranges on bills and spent money
• You can train ScaleXP to select the correct matching expense account for a given supplier

Benefits of coding to the expense account:

• No need to select a matching expense account
• Easy to track in one prepayment asset account

Quick start tips

To begin using ScaleXP efficiently:

1. Create a new prepaid expense account. Set up a balance sheet account such as "Prepaid expenses ScaleXP".
2. Select a switchover date. Choose the first day of any month as your start date. It can be a past or future month, whichever is easier for you. There is no need to wait until the end of the financial year.

Setting up ScaleXP takes about five minutes. Follow the steps below based on your existing bill coding practices.

If you currently code prepaid bills to the balance sheet

1. Create the new prepayments balance sheet account in Xero or QuickBooks.
2. In Expense Journal Settings, set your default prepayments account to the new ScaleXP prepaid expense balance sheet account, making sure no other balance sheet accounts are selected (see How to set and change expense journal settings). It is critical to select only your new balance sheet account; otherwise your journal will not be correct. If the field is locked, ask Customer Success to make the change via Live Chat or email (support@scalexp.com).
3. Use the new account in Xero or QuickBooks: ensure that after the switchover date, all bills are coded to the new ScaleXP prepayments account.
4. In ScaleXP, use All Expenses to see included prepaid expenses, making sure the date selection range begins with your switchover date.
5. Use Review Prepayments to allocate to the correct expense accounts.

Continue to track bills pre-dating the switchover via your existing spreadsheets and manual journals. Month by month, the balances in your older prepayment journals and accounts will gradually reduce to zero.

This approach eliminates the need to adjust historical journals or modify bills already in your accounting system, making the transition smoother.

If you currently code bills to an expense account on the profit & loss

1. Create the new prepayments balance sheet account in Xero or QuickBooks.
2. In Expense Journal Settings, set your default prepayments account to the new ScaleXP prepaid expense balance sheet account, making sure no other balance sheet accounts are selected (see How to set and change expense journal settings). It is critical to select only your new balance sheet account; otherwise your journal will not be correct. If the field is locked, ask Customer Success to make the change via Live Chat or email (support@scalexp.com).
3. Identify prepaid bills (expenses): in ScaleXP, mark pre-switchover bills as Excluded from journals. This ensures that only bills from after the switchover date are included in ScaleXP journals.

Related articles

• How to automate expense recognition journals in ScaleXP
• How to automate prepaid expenses: Setting up prepaid expenses in ScaleXP
• How to automate your prepaid expense journal: review and post the prepayments journal
• How to review bills by issue month
• As spent versus IFRS / GAAP view
• How to add a missing bill or cost supplier
• How to set and change expense journal settings